Challenges to the role of the executive mayor in financial management at selected local municipalities in the Free State

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CHALLENGES TO THE ROLE OF THE

EXECUTIVE

MAYOR IN FINANCIAL

MANAGEMENT AT SELECTED LOCAL

MUNICIPALITIES

IN

THE FREE STATE

BRUTUS TSHEPO

MAHLAKU

BA HONS (NWU)

A mini- dissertation

submitted in partial fulfilment

of the

requirements for

the degree

MASTER OF

ARTS

in

Public

Management and Governance

at the

VAAL TRIANGLE CAMPUS

of

the

North-West University

Vanderbijlpark

Supervisor: Prof Ernest P Ababio November 2013

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DECLARATION

I, BRUTUS TSHEPO MAHLAKU declare that the mini-dissertation titled "Challenges to the role of the Executive Mayor in financial management at selected local municipalities in the Free State" is my own work and that all the sources I have used or quoted have been indicated and acknowledged by means of complete references.

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DEDICATION

This study is dedicated to my late mother, Merriam Tunki Magahle whose support and love I treasure. It is also dedicated to my brothers and sisters, and my fellow South Africans who I serve and whose courage, determination and patriotism remain my source of inspiration.

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ACKNOWLEDGEMENTS

I wish to extend my gratitude and appreciation to the following persons who offered assistance during the period of my study, without their help and understanding this work would not have been completed.

Prof EP Ababio, my supervisor, for his invaluable criticism, expert advice and constant patience.

Ms Aldine Ooshuizen for artistic. design and support;

Fezile Dabi District Municipality officials in particular Ms Lindi Molibeli whose doors were always open to my endless request for information, my colleagues and officials of local municipalities in the district for their valuable contribution in providing official documents when request.

My friends, and comrades who have been a source of inspiration and understanding in the competition of this research work.

The appreciate of the support of the following people, namely, Kaizer Sithole, Lincoln Sefadi, Tshidi Mkhefa and Jane Mabe) in the completion of my studies.\

My family especially my Ntsoaki and my two lovely children Boitumelo and Katleho for their understanding and support in the completion of my studies. Our heavenly father for giving me the wisdom to complete these study without his will and grace all my efforts would have been in vain.

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SUMMARY

Local government, as government at grassroot, has, probabry undergone

transformation more than any institution in post-1994 South Africa.

State-of-the-art legislation have been passed that have restructured municipalities, and, especially, in the areas of performance and conduct of councillors and officials. Prominent in the areas of transformation are the roles of the Executive Mayor, which are no longer ceremonial as well as the radical changes which have been legislated in municipal financial management.

This study was undertaken to determine the challenges that confront the Executive Mayor in financial management in selected local municipalities in the Free State. The hypothesis was formulated that "despite the state-of-the

art legislation to regulate municipal finance, Executive Mayors in

municipalities face the challenge of poor service delivery as a result of non-compliance to financial statutes due to human resource incapacity". To test the hypothesis, use was made by empirical research that comprised

questionnaires completed by sample of managers and officials in the selected

local municipalities of Mafube, Metsimaholo, Moqhaka and Ngwathe.The findings, amongst others, were that:

• Human capital in the 4 selected local municipalities are in their prime

age. 69 percent of managers are in the aged betweenf 30 vears to 50

years;

• 57 percent of the managers responded that they have adequate

qualifications and training to pursue the challenges in municipal finance;

• All 4 municipalities normally get their budgets approved as required by compliance.

• The hypothesis was consequently, invalidated. The study ends with recommendations to help improve standards and quality of financial management practice in the 4 municipalities.

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TABLE OF CONTENTS DECLARATION ... .ii DEDICATION ... .iii ACKNOWLEDGEMENTS ... iv SUMMARY ... v TABLE OF CONTENTS ... .., ... n. vi LIST OF TABLES ... , xi

LIST OF FIGURES ... u . . . xii

CHAPTER 1 ... 1

INTRODUCTION: ORIENTATION, PROBLEM STATEMENT, RESEARCH METHOD ... 1

1.1 INTRODUCTION ... 1

1 .. 2 ORIENTATION AND BACKGROUND ... 1

1.3 PROBLEM STATEMENT ... 3 1.4 HYPOTHESIS ... 4 1.5 RESEARCH QUESTIONS ... 4 1.6 RESEARCH OBJECTIVES ... 5 1.7 RESEARCH METHODS ... , ... 5 1.7.1 Literature Review ... 5 1.7.2 Empirical Survey ... 6 1.8 ETHICS ... 7 1.9 CHAPTER OU· TLIN E ... 7 CHAPTER 2 ... 8

THE CONCEPT PUBLIC FINANCIAL MANAGEMENT ... 8

___ _ _ _ _ _ _ ., ... ~F--~---H---~---H·-~--m ~ - - - -- --~ - - ----~-~---~----~~---

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2.2

2.3

2.3.1 2.3.2 2.3.3 2.3.4 2.3.5 2.3.6 2.4 2.4.1 2.4.1.1 2.4.1.2 2.4.1.3 2.4.1.4 2.5 2.5.1 2.5.2

2.6

2.6.1 2.6.2 2.6.3 2.6.4 2.6.4.1 2.6.4.2 THE CONCEPT ... 8

LEGISLATIVE FRAMEWORK FOR PUBLIC FINANCIAL MANAGEMENT ... 10

The 1996 Constitution ... 1 0 The White Paper on local Government ... 12

The Municipal Systems Act ... 12

The Municipal Finance Management Act ... 13

Intergovernmental Fiscal Relations Act ... 13

The Preferential Procurement Policy Framework ... 14

BUDGETING IN THE PUBLIC SECTOR ... 14

Budgetary Control ... 16

Supplementary Estimates and Adjustment Budgets ... 17

Virement between Main Divisions within Votes ... 18

Roll overs and Unspent Revenue Balances ... 18

Unauthorised, Irregular and Wasteful Expenditure ... 19

LINKING STRATEGIC PLANNING AND BUDGETING ... 20

Developing Programmes in Strategic Plan ... 20

Advantages of Integrated Planning ... 21

RISK MANAGEMENT ... 21

Risk Management Units ... 22

Risk Management Policies ... 22

Record-keeping ... 23

Combating Risk ... 23

Risk Control ... 23

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2.7.1 2.7.1.1 2.7.1.2 2.7.1.3

2.8

What Financial Reporting Is ... 26

The Annual Report ... 26

External Reports ... 27

Users of Financial Information ... 27

CONCLUSION ... 28

CHAPTER 3 ... 29

LEGISLATION AND PROCEDURAL SYSTEMS ON THE FINANCIAL ROLES OF THE EXECUTIVE MAYOR ... 29

3.2 SCENARIO OF FINANCIAL CHALLENGES TO THE EXECUTIVE MAYOR ... 29

3.3 LEGISLATION ON THE EXECUTIVE MAYOR ... 31

3.3.1 The Constitution Mandates ... 31

3.4 THE EXECUTIVE MAYOR ... 32

3.4.1 Functions of the Executive Mayor ... 33

3.4.2 Identifying Key Performance Areas ... 34

3.5 FINANCIAL ROLES OF THE EXECUTIVE MAYOR ... 34

3.5.1 Strategizing for budgeting ... 34

3.5.2 Budget Preparation Process ... 35

3.5.3 Public Participation in the Budget Process ... 36

3.6 CONCLUSION ... 37

CHAPTER 4 ... 38

EMPIRICAL RESEARCH ON THE FINANCIAL CHALLENGES TO THE EXECUTIVE MAYOR ... 38

4.2 PERMISSION TO CONDUCT THE RESEARCH ... 38

4.3 THE RESEARCH PARADIGM ... 39

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4.4 THE RESEARCH DESIGN ............. 40

4.4. 1 Qualitative research approach ...... 40

4.4.2 Quantitative research approach ...... 41

4.4.3 The n1ixed-methods research design ... 42

4.4.4 The research design/approach that guided the study ... 43

4.5 THE POPULATION ....... 44

4.6 THE SAMPLE FRAME ............ 44

4.7 DATA-COLLECTION METHODS AND TECHNIQUES ... 45

4.7.1 lntervie\vs ... 45

4. 7.2 Questionnaires ...... 47

4.T3 Doctment study or content analysis ....... 48

4.8 TRUSlWORTHNESS /VALIDITY 1 RELIABILITY ISSUES ... 49

4.9 THEDATAANALYSIS ........... 50

4.10 EMPIRICAL ANALYSIS ... uu ... u··· 50

4.1 0.1 Den1ograhic Information ... 50

4.10.2 Section C: Executive Mayor ... 51

4.1 0.3 Skills and partfcipation ... 52

4. 10.4 On Financial Relations with Managers ... 52

4.10.5 On approval of the budget ... 52

4.10.6 On knowtedge of financial policy ... 52

4. 10.7 On the question of poHtrcal interference ... 53

4.10.8 On areas of serious lack of service provision ... 53

4.10.9 Would you elect your current Executive Mayor if ... 53

4.10.10 Working rel,ations ... 63

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5.2 SUMMARY ... 55 5.3 TESTING THE HYPOTHESIS ... 56 5.4 FI.NDINGS ... u . ... . . . ... . ... . .. .. . .. 56 5.5 RECOMMENDATION s •••••••••••••••u••••••••oo••••••••••••••••••••••••••••••••••••••••••••••••••••• 56 5.6 CONCLUSION ... 57 BIBLIOGRAPHY ... 59 ··---~---.,...··--·--- _____ .. __________ , ... ---"-""~---·---~---"·---··· ---~--~-~---~~---~--~ X

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LIST OF TABLES

TABLE 3.1: Categories of Municipalities in South Africa ... 32 TABLE 3.2: Public Meetings as Participatory Governance at Metsimaholo Local Municipality, Sasolburg ... 37

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LIST OF FIGURES

No table of figures entries found.